UK to become a nation of renters? New report urges the building of more homes to rent… at the expense of affordable housing

A government-commissioned report has called for more support for the building of new homes to rent - including lower requirements for new housing projects to include affordable homes.

The report, by Sir Adrian Montague, chairman of private equity firm 3i, claims private rental properties will play and increasingly important role in providing homes for British people, with young people renting for longer periods of time before buying as getting on to the housing ladder becomes increasingly difficult.

Furthermore, private rentals can offer some advantages over buying, by enabling people to move to take up jobs elsewhere and respond to changing circumstances, the report said.

Vital: The rental market now houses 3.6 million households

As such, more should be done to encourage investment in the private rental sector, which has gone through a period of rapid growth and is relied upon by millions of people.

If this means waiving requirements for builders to include a quota of affordable housing in new housing developments, so be it, the review of the private rented sector said.

The report has already received government support, with housing minister Grant Shapps today calling it a ‘blueprint’ to expand the sector.

However critics warned that the change would come at the expense of people desperately struggling to get on the property ladder.

The review said councils should consider using powers to waive the requirement to build homes available for those on lower incomes to buy in order to increase the number of properties built to let.

It said: ‘Whilst desirability of affordable housing should not be ruled out, it should be weighed against the benefits already built into market rent developments, in the context of an accurate assessment of the economics of building homes to rent.

‘In many cases, it will be appropriate for authorities to waive affordable housing requirements in relation to schemes for private rental, or to the private rental component of larger schemes also including an owner-occupier component.’

The review also recommends setting up a task force to encourage build-to-let investment and the release of unused publicly-owned land for development.

Mr Shapps said he will be considering the report’s recommendations ‘very carefully’.

He said: ‘We're determined to encourage greater investment in the build-to-let market and boost the country's private rented sector, which plays an integral role in meeting the nation's housing needs and aspirations.

‘In the past it's often been seen as the Cinderella of the housing market, but when over three million people rely on this sector for their home, this is clearly no longer the case.

‘A major part of this is to attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants.’

But the report's recommendations were challenged by industry groups, councils, charities and Labour.

David Orr, chief executive of National Housing Federation, said: ‘While we agree that there needs to be more private market rented housing, this should not be at the expense of affordable homes.

Tough environment: Rental prices are being pushed up by frustrated would-be homeowners who cannot afford to buy

‘The one doesn't replace the other as both are needed for a fully functional housing market.

Shelter's chief executive Campbell Robb said the report ‘misses a trick’ by ‘offering nothing for the millions of people already in the sector, paying sky-high rents and living under constant threat of eviction or further rent rises’.

He added: ‘Despite the increase in the number of people renting, the long term aspiration for many remains to be a homeowner.

‘While more rented housing could help ease pressure on this over-heated market, it's vital that this does not come at the expense of building affordable homes for people across the country already struggling to get on the property ladder in their local area.

‘Young people who are working hard and saving towards a secure and affordable home need to know that the Government is on their side.’

Mike Jones, chairman of the Local Government Association's environment and housing board, said: ‘Any strategy to boost the number of new rental homes should not come at the expense of new affordable housing, and councils will in consultation with their residents always seek to ensure a suitable balance between the need for private rental property and new affordable homes.’

Shadow housing minister Jack Dromey said: ‘While many of the measures recommended in this report are sensible, for instance on the use of public land, on attracting investment and on standards in the private rented sector, we are not convinced that the answer to the crisis created by this Government is to further water down affordable housing requirements that councils place on developers.

‘As rents hit a record high in July, many families are already paying the price of the Tory-led Government's failure to build enough affordable homes - the Government should be acting to address this problem, not looking for ways to water down existing legislation which could make the problem worse.

‘Huge cuts to Government investment in housing, a lack of liquidity in the finance markets, the failure of banks to lend to homebuyers, and stagnating demand are the real hurdles to viability, not the cost of providing much needed affordable housing.’